A new set of civil monetary penalties (CMPs) based on audits conducted by CMS last year indicate that Medicare Advantage and Part D plan sponsors are continuing to make some of the same mistakes in the drug-related areas of Formulary & Benefit Administration and Part D Coverage Determinations, Appeals, and Grievances (CDAG) as well as on the Part C side, where they are slow to process organization determination requests. But the notices also validate a growing area of CMS concern — plans misclassifying Part D coverage determination and redetermination requests as grievances — and a surprising finding that one compliance expert says stems from a common misinterpretation of guidance.

The notices posted earlier this month to the CMS Parts C and D Enforcement Actions webpage indicate that the agency intends to impose CMPs totaling $7.3 million on 17 insurers for deficiencies uncovered in their 2016 program audits. While it’s difficult to compare the scope of the recently posted 2016 audit findings with the 2015 findings without having seen the full set of results published annually in CMS’s Part C and Part D Program Audit Annual Report, attorney Helaine Fingold points out that the size of the largest fine imposed dropped from about $3.1 million to $2.5 million and the average CMP was much lower at about $429,000.

Last year’s report indicated that CMS in 2015 and early 2016 imposed 25 enforcement actions on MA and Part D sponsors that included five intermediate sanctions and 20 CMPs totaling $10.3 million, with an average of $516,163 per CMP (MAN 9/29/16, p. 6). Fingold, who is senior counsel in the Health Care and Life Sciences practice at the law firm Epstein Becker Green, says the lower figures don’t necessarily mean that there were fewer issues identified and suggests they could have more to do with the makeup of the plans, since the amount of the CMP tends to be higher for larger plans.

Of the nine specific violations cited across the letters, the one that occurred the most — with six out of 17 plans getting dinged for it — was a failure to effectuate exception approvals for the entire year. CMS in its letters to insurers noted that a failure to effectuate these approvals through the end of the plan year creates a “substantial likelihood that enrollees were required to go through the exceptions process a second time in order to receive medications that were previously approved.”

Common Error Stemmed From HRM Confusion

But Derek Frye, audit and compliance practice leader with The Burchfield Group, suggests that the plans’ failure in this area stems from a misinterpretation of CMS guidance related to high-risk medications (HRMs). CMS has stated it may penalize plans that have outlier patient safety rates, and because CMS adopted the Pharmacy Quality Alliance (PQA) guidance for HRM reporting — which considers patients to be “at risk” if they’re on 90 or more days authorized for some HRMs — some health plans may be limiting coverage determination durations for certain HRMs to 90 days or less.

“Plans took CMS’s approval of the PQA guidance to mean that some HRM drugs should have at most a 90-day approval duration, but apparently, CMS expected approvals to be effectuated for the entire year. A lot of plans are finding (under audit) that CMS’s intent was different, and are now being penalized,” says Frye. As a result, some of the audited plans are expanding coverage approvals to the end of the year.

This deficiency was identified as the only CDAG-related violation in UnitedHealth Group’s 2016 audit. At nearly $2.5 million, CMS intends to impose the largest fine on UnitedHealth for 56 of its MA Prescription Drug and Prescription Drug Plan contracts. According to a Nov. 22 letter from Medicare Parts C and D Oversight and Enforcement Group Director Gerard Mulcahy, an audit of the insurer’s Medicare operations from May 2 through May 13, 2016, also uncovered “systemic” failures in the area of formulary/benefit administration, such as a failure to appropriately administer its CMS-approved formulary by applying unapproved utilization management and prior authorization requirements. According to the letter, any appeal filed by UnitedHealth was required by Jan. 23.

When asked by AIS Health if the insurer sought to appeal that finding, a UnitedHealth spokesperson responded: “We work closely with CMS to improve operations of our Medicare Advantage and Part D plans. We immediately addressed the findings of this planned audit, which occurred last year, and remain committed to helping our members with the care they need, when they need it.”

According to a Feb. 23 letter, WellCare Health Plans, Inc. was also cited for violating formulary and benefit administration requirements as well as a failure to, among other things, effectuate exceptions approvals through the end of the year. When asked about its planned response, a spokesperson said the insurer is currently reviewing the audit. “We take issues regarding our Medicare obligations that impact our members very seriously,” stated WellCare. “We will continue to partner with CMS to better understand the details of this audit.” CMS intends to impose a CMP of more than $1.1 million on the insurer, which has more than 1.3 million MA and Part D enrollees. The insurer has until April 25 to request a hearing to appeal the determination.

The second most commonly cited CDAG deficiency was the misclassification of coverage determinations and/or redetermination requests as grievances, which was found in five of the 17 CMP notices. In order to take a deeper look at how these requests are being handled, CMS last year revised its 2017 audit protocols to include the collection of call logs and expanded the number of grievances sampled from 15 to 20. As a result, this “No 2. Item” could become No. 1 next year, predicts Frye.

View the enforcement actions at http://tinyurl.com/hupmbem.